The return of Donald Trump to the White House marks a significant shift in the sanctions and anti-money laundering (AML) landscape. His second term is set to bring sweeping changes to U.S. foreign policy, particularly in these critical areas. This article explores the early executive actions targeting Iran, cartels, and China, and examines how these changes are reshaping the regulatory environment. It also looks at what businesses need to do to stay ahead in this evolving landscape.L

With Trump back in office, companies can expect a reorientation of U.S. sanctions and anti-money laundering efforts. While enforcement will continue to be a priority, the regulatory landscape is shifting to focus on new areas. These changes will affect how businesses assess and manage risk, particularly with regard to sanctions enforcement and AML obligations.

The new administration’s policy changes will impact various sectors, and it’s crucial for companies to adapt to this evolving environment. Understanding the key shifts and taking proactive steps to align with new regulations will be essential for staying compliant and mitigating potential risks.

A Look Back: The Landscape at the End of the Biden Administration

To understand the shifts under Trump 2.0, it’s important to first look back at the regulatory environment in 2024, during the last year of the Biden Administration. The Treasury Department’s Office of Foreign Assets Control (OFAC) continued to tighten sanctions on Russia, targeting Russian financial and energy sectors. This action was part of the ongoing efforts to deter Russia’s actions related to its invasion of Ukraine.

At the same time, OFAC advanced U.S. foreign policy goals by imposing sanctions on entities and individuals involved in terrorist financing, including those linked to Hamas and Hezbollah. The department also continued its focus on Iran’s nuclear program, imposing strict sanctions against individuals and entities connected to it.

However, the most significant shift came from the tightening of enforcement and a reduction in penalties, from $1.5 billion in 2023 down to $49 million in 2024. This was part of an overall decline in penalties, but still indicative of an active enforcement environment.

Moreover, the U.S. government’s focus on anti-money laundering continued under the Biden Administration. In 2024, the Financial Crimes Enforcement Network (FinCEN) made substantial strides with new regulations that extended AML requirements to investment advisers and non-financed real estate transactions. Additionally, FinCEN pushed forward the implementation of the Corporate Transparency Act (CTA), which compelled millions of legal entities to disclose their beneficial ownership information.

Key Shifts Under the Trump Administration

Under Trump 2.0, the regulatory environment is undergoing significant changes, with the administration already issuing a number of executive orders and memoranda to reshuffle the deck.

Iran and the “Maximum Pressure” Campaign

One of the early actions in Trump’s second term was a push for a more aggressive stance against Iran. On February 4, Trump issued a national security memorandum aimed at imposing maximum pressure on the Iranian regime. The administration’s objectives are clear: curb Iran’s nuclear threat, halt its ballistic missile program, and stop its support for terrorist groups. As part of these efforts, Trump directed the Treasury Department to consider imposing “Know Your Customer’s Customer” (KYCC) obligations, ensuring that sanctions extend to entities doing business with sanctioned parties in Iran.

This KYCC shift could have far-reaching implications for financial institutions, as they will be required to track not just their direct clients but also their clients’ clients to ensure they are not indirectly conducting business with Iranian entities. This move could dramatically expand the compliance burden on businesses engaging in cross-border transactions involving Iran.

Cartel Designations and the “Foreign Terrorist Organization” (FTO) Label

Trump has also signaled his intention to use sanctions to target cartels and other transnational criminal organizations. On January 20, 2025, Trump issued an executive order directing cabinet members to consider designating cartels as Foreign Terrorist Organizations (FTOs). This is a significant shift from past practices, as cartels have traditionally been designated under a different set of sanctions regulations. By labeling cartels as FTOs, Trump is increasing the stakes for companies involved in transactions with regions where these cartels operate, including heightened civil and criminal liabilities.

The first step in this process came on February 19, 2025, when the U.S. State Department designated several Mexican drug cartels and gangs like MS-13 and Tren de Aragua as FTOs. This will likely result in additional sanctions and penalties for any companies dealing with these groups, making it critical for compliance teams to update their risk assessments, especially those doing business in regions with cartel influence.

China: Sanctions and Trade Policy Under the Trump Administration

One of the most anticipated shifts under Trump’s second term is a further intensification of sanctions related to China. The Biden Administration already expanded sanctions targeting China, particularly those related to the circumvention of U.S. sanctions on Russia and Iran. Trump’s policies are expected to take this even further, with several executive orders already focusing on restricting U.S. investment in Chinese military and technological sectors.

On January 20, 2025, Trump issued a presidential memorandum focusing on strengthening U.S. economic ties while enforcing stricter measures against Chinese companies and industries. These efforts include a review of the Treasury’s outbound investment rules and further tightening export controls on sensitive technologies, such as semiconductors and artificial intelligence, aimed at preventing China from gaining access to cutting-edge technologies.

Other Key Sanctions and AML Developments

Trump’s administration has also placed a significant emphasis on Iran, Russia, and other international sanctions. Additionally, his administration has been scrutinizing export controls related to China. On top of this, the Trump administration’s stance on financial crimes compliance continues to prioritize anti-money laundering enforcement.

Given the high stakes involved, financial institutions must adopt a proactive stance on sanctions compliance. Monitoring the latest developments, such as the potential for increased penalties for non-compliance, will be critical to ensuring that organizations don’t fall behind in meeting new regulatory requirements.

Strengthening Compliance: Preparing for Trump 2.0’s Regulatory Landscape

As the Trump administration reshapes the sanctions and AML landscape, compliance professionals should take several steps to stay ahead of the curve. These steps include:

1. Holistic National Security Risk Assessments

Companies should perform a comprehensive review of their national security risk assessments, considering not only sanctions and AML risks but also the increasing regulatory scrutiny on export controls, trade policies, and evolving international regulations. This will help businesses identify potential gaps in their current compliance programs and stay prepared for future shifts.

2. Expanded Due Diligence and Monitoring

With the potential introduction of KYCC obligations, financial institutions must expand their due diligence procedures. This means not only scrutinizing direct customers but also their customers’ relationships and transactions, especially when dealing with countries and entities under heavy sanctions scrutiny like Iran, Russia, and China. Enhanced monitoring will be essential to ensure that companies aren’t inadvertently engaging in prohibited transactions.

3. Reassess Drug Trafficking Risks

Given Trump’s renewed focus on cartels and drug trafficking, companies should refresh their compliance frameworks around drug-related financial flows. It’s important to revisit risk assessments regarding narcotics-related funds and to be on the lookout for any new regulatory measures related to illicit drugs, particularly fentanyl.

4. Staying Agile with Iran and Russia Sanctions

Sanctions on Iran and Russia are likely to intensify, with a particular focus on secondary sanctions. Organizations that deal with entities in these regions should closely monitor any changes to the sanctions landscape, particularly as new designations and sanctions are added.

Conclusion: Navigating a Changing Landscape

The shift to Trump 2.0 is a significant moment for the sanctions and AML compliance space. As the regulatory environment continues to evolve, businesses must adapt to the new priorities, including tougher measures against Iran, expanded scrutiny on China, and greater attention on cartel-related activities. Companies should act now to evaluate their risk exposure, update their compliance frameworks, and stay alert to new regulatory developments.

Related Links

• OFAC Sanctions List – U.S. Department of the Treasury
• FinCEN AML Regulations
• Biden Administration’s Sanctions Policy Overview – White House
• State Department’s Sanctions on Cartels and Criminal Organizations
• U.S. Treasury Sanctions on China

Related Links

• Wall Street Optimism Eases: Trump Victory’s Mixed Signals for Bankers
• How FINCEN’s Geographic Targeting Order Aims to Disrupt Cartel Money Laundering
• How Crypto Deregulation Could Empower Terrorism and Extremism

Source: Corporate Compliance Insights